The world of accountancy and taxation is witnessing the sounds of anguish and disbelief as taxpayers are being told by their accountants that in the next 20 months they will receive a demand for tax saved on any one of 1200 tax avoidance schemes which have been heavily marketed by accountants across the country.
The rise of negligence claims against these accountants runs parallel to these demands as taxpayers indignantly seek to deflect the cost.
Third party advice from accountants not tainted by having adopted these avoidance techniques is now being sought by indignant clients to analyse the actions of their initial advisers, many of whom received substantial incentives to pedal hopeless schemes whilst making dubious claims about them.
David Adams of Halifax-based tax specialists Lindley Adams is not surprised that the ‘chickens have come home to roost’. Explaining that schemes have to be registered with Her Majesty’s Revenue & Customs, he comments that it is highly significant that these have dropped off to a trickle as the tax avoidance industry unravels with previously highly paid individuals seeking less contentious use of their skills.
“Never have such shockwaves hit the quiet, backwater world of accountancy”, says David, who warned of these schemes in an article entitled ‘Nowhere to Hide’ published last year in Financial Adviser magazine.
The government proposes to recoup an estimated 7 billion pounds in tax that had been escaping through loopholes. David explains that the likely knock-on effect of which will be that businesses will take up hard-pressed available finance to foot the bills, which would otherwise be used to stimulate economic growth. His concern is that in time this could also drive down the market values of commercial and residential property.
More details on the government’s action on tax avoidance can can be found at www.gov.uk under Tax Avoidance Schemes: Accelerated Payments.
Lindley Adams Ltd
Halifax
david@lindley-adams.co.uk
David is a Fellow of the Institute of Chartered Accountants in England and Wales and an associate of the Chartered Taxation Institute. He also lectures in taxation.